There are many reasons why a foreign enterprise is interested in Company Registration solution. Whether it is due to business policies to work directly in the market or planning to invest in the country. All in all, once the decision is made about having a physical presence in the country, the foreign business needs to have a clear understanding of various business structures in Iran. With this information, they choose the most convenient type of Company for handling their operations in the country.
In this post, IranPartner decided to get you more familiar with Company Registration and common types of company in Iran. There are different alternatives intended for various activities. In general, there are seven types of company in Iran:
1. Public Joint Stock Company or Corporation
2. Limited Liability Company (Commonly known as L.L.C.),
3. General Partnership,
4. Limited Partnership,
5. Private Joint Stock Company,
6. Proportional Liability Partnership,
7. Production and Consumption Cooperative Society.
However, the main and most common types of company in Iran for most entrepreneurs are Limited Liability Company, Private Joint Stock Company, and Public Joint Stock Company.
Limited Liability Company
An LLC company can be registered with at least two shareholders with 100% foreign ownership. Shareholders may be both natural persons of all nationalities as well as legal persons. The CEO in an LLC can be appointed for an indefinite period. It is not mandatory for the LLC company to deposit the whole registered capital in the company’s bank account. This type of company usually suits most of the foreign businesses that are willing to be presented directly in the market.
Private Joint Stock Company
Regarding the operations, there is no difference between an LLC and a Private Joint Stock Company. Although, they are slightly different when it comes to incorporation. The major differences are:
- Private Joint Stock Company is obligated to appoint an auditor; the company needs to know that they will have to submit all their financial statements to the Government, annually.
- It needs at least three shareholders, who can be of all nationalities.
- Minimum required capital for Private Joint Stock Company is IRR 1,000,000 M.
- The CEO in such a company will be selected for a period of two years. However, there is no restriction for reappointment.
- In a Private Joint Stock Company, the total amount of the registered capital must be deposited in the company’s bank account.
Public Joint Stock Company
The public joint stock company is recommended for those that are willing to raise public capital. For such cases, two directors and at least five shareholders of any nationality are required in order to get the company registered in Iran. 20% of the company shares will be assigned to the general public. Moreover, the company must be listed on the national stock exchange. Same as the Private Joint Stock, this type of company also needs to submit all its financial statements to the government annually.
According to the Iranian Law, it is allowed for a foreign company to register a branch office in Iran with no Iranian participation. This branch is an extension of the parent company, hence, the directors and shareholders will be the same as the original company. Although, a resident respresentative needs to be appointed in order to handle the procedures done by this branch.
The scope of activities will be defined by the parent company and the branch is only allowed to handle such tasks, though it is still able to invoice the local customers, to sign domestic sales contracts and to receive payments from customers.
It is mandatory for any foreign investor to gain clear image and understanding of the business structures available in the new target market. Being informed and prepared prior to taking any action will make a huge difference in pursuing a successful business in the new country.
In case you are looking for setting up a business in Iran, consult with specialized legal companies to select the most suitable structure for your company registration. IranPartner team will be pleased to assist you with your inquiry for company setup in Iran. Feel free to contact us at [email protected]